How Business Has Changed for One Home Instead Franchise Owner

By Amy Baxter | April 10, 2017

Home care businesses are up against some serious headwinds—from burdensome regulations on small businesses to rising costs related to wages and turnover rates. But those challenges haven’t stopped the growth of some of the biggest national home care franchisors and their franchisees.

After getting into the home care business in 2001 with large, international franchisor Home Instead Senior Care, a lot has changed for franchise owners Michael and Jackie Melinger over the last 16 years.

Home Health Care News sat down with the Melingers, owners of three Chicago-area Home Instead franchises with a fourth location on the way, and discovered which challenge has remained the same and how the business has adapted over the years.

Finding Caregivers

Perhaps unsurprisingly, the biggest issue that home care companies face today—the caregiver shortage—is nothing new. For Michael and Jackie Melinger, the challenge has lasted over their entire careers in home care.

The challenge is actually more about finding the right caregivers, adds Jackie Melinger, MS, HRIR, and president of the franchises co-owned by the pair.

“We could hire a lot more people than we do, but we want to be sure the people we hire are OK to work with our parents,” she said.

Alongside finding qualified caregivers, reducing turnover has been an ongoing focus for the franchise owners over the last several years. To boost the likelihood that caregivers will remain with the company, many prospectiveworkers are turned away during the recruiting process, Michael Melinger said.

“We turn down a lot of people, and we lose business because of it,” he said. “We will turn away business rather than hire someone we don’t think we should. …That would be business suicide, and it’s not the right thing to do.”

To combat the issue, the Melingers say they are “constantly” recruiting caregivers. They even plan to open a fourth location this year as a satellite office for recruiting in other neighborhoods.

Rising Cost of Doing Business

One of the most significant changes over the last 16 years has been the rising burdens small business owners face when it comes to health care. For the Melingers, the Affordable Care Act (ACA) meant they would have to provide health care insurance to their staff.

“As a small player, the health care law is tremendously expensive and burdensome for us to keep track of,” Michael Melinger said. “It’s complex and, administratively, puts us in the health care business, which we don’t want to focus on providing health insurance—we want to focus on caregiving. Whereas before, we weren’t having to do that.”

Fortunately, the added cost of health insurance and other employee benefits, including paid time off and a matching 401(k) benefit, has helped the company attract more caregivers.

“Maybe one advantage is that offering health insurance opens up this line of work for those who might not have considered it in the past,” Michael Melinger said.

With the ACA potentially on the chopping block under the Trump administration and a Republican-controlled Congress, small businesses could no longer be required to offer health insurance to their employees. Even under those circumstances, however, the Melingers would still likely offer the benefit to their caregivers, Jackie Melinger said.

In addition to added health care costs, rising minimum wage levels have impacted the cost of business. Changing regulations related to overtime exemptions for home care workers have perhaps been more burdensome than rising wages, according to Michael Melinger.

“Right now, the spread of wages to [care] rates is being pushed up by a lot of other factors,” Michael Melinger said. “There are incredibly complicated things from the fallout of the companionship exemption. Buried inside some of those changes are regulations about how to keep track of and pay for sleep time. Some onerous restrictions have been put on how we have to keep track of that, and that has played into the spread getting bigger and bigger.”

While private duty home care providers can increase rates to meet their rising costs, there could be a ceiling that people are willing to pay, Michael Melinger admitted.

Looking ahead, the franchise owners hope their growing business and added location will help them recruit more caregivers, while they will increasingly be on the lookout for innovative solutions to streamline costs.

When not writing about all things home health, Amy fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."

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